If you are sensitive to smells, have allergies, are not social, then do not opt for the hard seats. If however you want a cultural experience and/or want to save money... it is the way to go, but since riding a train to Tibet is quite a long journey, it is not recommended for you to take hard seat class.
Though it is called HARD seating car, the seats are actually quite soft and nice than the ordinary trains in China. And under the seats, there are individual oxygen outlets for passengers. In fact, while running from Golmud to Lhasa, oxygen will be spreading into the cars, and most passengers won’t get strong altitude sickness during the journey on the train.
Hard Seats on Tibet train
Above the windows, there are selves for storing luggage.
FYI, the restrictions for carry-on luggage are as follows:
For Child (whose height is shorter than 1.3m): 10kg luggage for each
For Adult (common passenger): 20kg luggage for each
And the width, height, length of one piece of luggage is limited within 160cm; the length of luggage in shape of pole is limited within 200cm.